Alarum Technologies Ltd. Q3 FY2024 earnings call

• NetNut is the strategic focus. The IPPN network has seen enhanced infrastructure coverage and endpoints, with a new dashboard improving customer experience. - In the data collection and labeling market, a Fortune 200 company expanded its subscription by adopting the Website Unblocker. The Website Unblocker is crucial for entering the data collection and labeling market, and the AI data collector will offer advantages like continuous data access with minimal downtime. - Considerable investments in NetNut over recent years have positioned the company for entry into the data world, and there's an increasing demand for data sets which the company's solutions aim to address.

In Q3 2024, total revenues hit $7.2 million, with NetNut contributing nearly $7 million, which is nearly 100% of the quarterly and accumulated business. Adjusted EBITDA in Q3 2024 was $1.4 million, exceeding guidance. Cash and cash equivalents at the end of the quarter increased to $24 million.

• Anticipate Q4 2024 revenue to continue year - over - year growth, estimating revenues of $7.5 million plus - minus 3%. - Q4 2024 adjusted EBITDA is expected to range from $1.3 million to $1.7 million.

Q: Would like some more clarification on investments in upgrading the IPPN network, whether they were fully made in Q3, customer - driven or internally driven and how gross margins should trend going forward?

A: It's a combination of customer feedback and internal decisions. The purpose is to stay more or less in the same gross margins unless there's a unique one - time investment opportunity. Looking to the future, there may be opportunities to increase the network which could have a short - term impact on gross margins but long - term will lead to higher growth rate and great gross margins.

Q: On the Fortune 200 customer win, how expensive the deal is, what the revenue uplift has been so far, and if they could continue expanding over the next year or two years?

A: Cannot expose the exact number, but it's a respectful number. It's just the beginning, they started with lower traffic for evaluation and it's supposed to be a long - term engagement with renewal and potential extension.

Q: What percentage of customers are still with NetNut this year and net new customer contribution in Q3?

A: Most revenues in a specific quarter are from existing customers, something like 80% or more. The NRR of 1.42 indicates the typical customer does 42% more over four quarters versus the previous four quarters.

Q: Provide that metric that's comparable in the September quarter to last quarter's dozens of new customers that generated $400,000 in first month revenue and if seeing any changes to the pace of business development?

A: This quarter was better than the previous one in that indicator. Project to close Q4 with $7.5 million plus - minus 3%, so in high - level business as usual, no significant change to mention.

Q: Describe how you're pricing the Website Unblocker, is it usage base, recurring monthly charge, minimum with upside and how it scales?

A: Based on bandwidth, mostly on requests and duration. You can buy certain amounts of requests for different durations like one month, three months, etc. But pricing model is still under investigation to find the best for customers and scaling.

Q: Quantify the number of evaluations going on or initial target customers of the Website Unblocker that are already customers of other Alarum applications?

A: The Unblocker product is different from the proxy network. Took a step - by - step approach. The winning Fortune 200 company is a big step, and there are dozens of customers in the pipeline waiting for the solution with defined timelines and goals.

Q: Discuss how the set of customers facing industry challenges that resulted in lower consumption during the September quarter, trends there and signs of recovery?

A: These specific customers haven't returned to increase usage. Focus remains on improving retention rates, driving growth by adding new customers and upselling to existing ones.

Q: You also filed the F3 for capital raise, could you touch base on that and with $24 million of cash on the books, is there an immediate need for capital?

A: We're profitable and well - funded, so no actual short - term plans to raise capital. Renewing the shelves is a technical common practice for flexibility in case of future strategic growth opportunities like M&A.

Q: Touch base on the number of warrants still out there and what their exercise prices are?

A: Total of about 240,000 warrants (less than 3% of fully diluted equity in ADSs). Exercise prices are mainly around $33 and some are $12, with some in the money or close to it and some far out of the money according to the share price today.